Regulation Z (Truth in Lending) Information for Students

office of student services

On July 30, 2009, the Federal Reserve approved final amendments to Regulation Z (Truth in Lending) that revise the disclosure requirements for private education loans. The amendments implement provisions of the Higher Education Opportunity Act (HEOA) enacted in August 2008. Under the amendments, creditors that extend private education loans must provide disclosures about loan terms and features on or with the loan application and must also disclose information about federal student loan programs that may offer less costly alternatives. Additional disclosures must be provided when the loan is approved and when the loan is consummated. The rules became effective on September 14, 2009, and lenders were required to be in compliance on February 14, 2010.

What loans are impacted by these regulations?

The amendments to Regulation Z (Truth in Lending) apply to all private education loans. They do not apply to Federal Title IV loans (Stafford, Perkins and PLUS). Certain loans issued by Boston College directly are subject to compliance with the new disclosure requirements. These include the Law School Loan Program, undergraduate and graduate Nursing Loans, the Lynch Graduate School of Education Bank of America Scholars Loan, and the Lynch Graduate School of Education Sharp Urban Scholars Loan. For these loans, the Application/Solicitation Disclosure Statement will be presented to you with your electronic financial aid award notification. These disclosures are listed below and can also be found on our website at www.bc.edu/ssforms. The subsequent disclosures, as well as the Self-Certification Form, will be presented to you electronically when you sign the loan promissory note. The Massachusetts No-Interest Loan Program is also subject to compliance with the new regulations. For this loan, the disclosure statements and the Self-Certification Form will be processed on paper by the Office of Student Services.

What does this mean to me?

The disclosure requirements for private education loans will change the process of applying for and receiving private education loans. The process will take longer from application to disbursement, and you will have additional responsibilities beyond the application, including acknowledgement of the new disclosure statements and completion of the Self-Certification Form. If you are planning to finance all or part of your cost of education with a private education loan, you should start the application process as early as possible to avoid any potential repercussions that could result from nonpayment of your student account.

What are the disclosure statements, and what is required of me?

1. Application/Solicitation Disclosure Statement

The Application/Solicitation Disclosure Statement will be provided to you by your lender when you apply for a private education loan. This disclosure will describe the general terms of the loan and the estimated amount that you will repay over the life of the loan. It will also provide you with information regarding the potential availability of lower-cost Federal loan options. You are not required to take any action upon receipt of this disclosure, but you should review it carefully so that you understand the terms of the loan that you are requesting.

The Approval Disclosure Statement will be provided to you when the loan is approved. It will include the specific terms of the loan being offered to you and could be presented to you on paper or electronically, depending on your lender's policies and procedures. You are required to accept the terms of the loan within 30 days by signing (or E-signing) and returning the Approval Disclosure Statement to your lender. The lender is not permitted to change the terms of the loan as described on the Approval Disclosure Statement, except as permitted by law. Failure to return the signed Approval Disclosure Statement may void the offer of credit from your lender.

3. Final Disclosure Statement

The Final Disclosure Statement will be provided to you once all requirements of the loan have been met, and prior to disbursement. You have 3 days from receipt of this disclosure to request that the loan be canceled. You are not required to take any action upon receipt of the Final Disclosure Statement unless you wish to cancel the loan.